Climate change is likely to pose a significant threat to the business of International Business Machines (IBM), its customers, and society. The transformation to a low-carbon economy is necessary to prevent the likely devastating effects of climate change on society and requires large companies to dramatically reduce their direct and indirect greenhouse gas emissions. As a result, companies are increasingly being called upon to take responsibility for their emissions and show leadership in finding solutions to global climate change. The Information Technology sector is particularly energy intensive. Investing in renewable energy will position IBM as a leader within an industry facing increasing public scrutiny for its energy consumption and greenhouse gas emissions.

Investment in renewable energy can yield a high return on investment while proactively responding to reputational risk. Furthermore, such investments deliver a direct benefit to society as it offers a low-carbon source of energy that mitigates climate change. For these reasons, major corporations, including several of our company’s competitors, are increasingly turning to renewable energy to power their operations and meet greenhouse gas reduction targets. At the 2012 United Nations Rio+20 meeting, Microsoft announced its commitment to increase purchases of renewable energy as a natural extension of their carbon neutrality commitment. Intel procured or offset 85% of its electricity consumption using renewable energy sources. Dell, Cisco, and Lockheed Martin source at least 25% of their electricity usage from renewables. Wal-Mart, Google, Ikea, Mars Incorporated and Unilever have each pledged to procure 100% of their energy from renewables. IBM’s sustainability practices matter to investors, as effective sustainability management and value creation are strongly linked.

IBM has made major investments in reducing carbon emission from its own operations, developing energy efficient products, and collaborating on initiatives to reduce the impacts of climate change. As a result, IBM was ranked #1 on Newsweek’s 2012 Green Ranking of U.S. companies. This indicates a high public expectation for sustainability at IBM.

For this reason, IBM faces potential reputation damage stemming from its failure to keep pace with industry leaders on this issue. Already, Greenpeace has publicly called on IBM to “set a target for a percentage of renewable energy to ensure that the company is not only keeping up with other similar companies but is truly leading the industry.”

In contrast to its sector peers, IBM has not set renewable energy sourcing or production targets- exposing it to business and reputational risk.

Resolved:

Shareholders request that the Board of Directors set company-wide targets to increase renewable energy sourcing and/or production and annually assess progress in reaching the targets.

Supporting statement:

In order for IBM to maintain its leadership on climate and sustainability issues, we recommend IBM join company leaders that have committed to procure 100 percent of their energy from renewable sources.